My Weekly Stock Debrief (Apr. 29 - May 6)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #18 of 2022 (Apr. 29 - May 6), our weekly newsletter reviewing the stock market performance.
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1. Market Performance
The equity markets were slightly down for the week, with the SP500 losing 0.2%, the Dow Jones 0.2%, and the NASDAQ 1.5%, for a 5th consecutive weekly loss. The markets started on the good side after the FED increased its benchmark rate by 50bps but with a less hawkish stance than expected. However, the rally proved to be short-lived, and the stocks fell sharply on Thursday and finished the week down.
Meanwhile, Oil surged back above $110 per barrel after the European Union announced plans to stop buying Russian oil and gas gradually.
Stocks are likely to remain volatile, especially with an update on inflation next week. Economists expect inflation for April to come below the 8.5% print of March, which may signal inflation has peaked and provide much-needed relief to equity markets.
2. SP500 Sector Performance
5 of the 11 SP500 sectors closed the week higher. This week, Energy led but gained more than 10%. Consumer cyclical and Real Estate lagged and declined by 2.9% and 3.8%, respectively.
Only 2 sectors are positive year-to-date. Energy remains the indisputable winner of 2022 with a 49% gain. Communication Services and Consumer Cyclical are the worst performer in 2022 and are down more than 20%.
3. SP500 Top / Bottom Stock Performers
Energy and material stocks performed well on the back of rising input prices and robust earnings reports. Occidental Petroleum (OXY), which reports earnings next week, added 18% in the last 5 days and is now up 124% in 2022.
Meanwhile, this week's worst performers were punished mainly for disappointing earnings reports and forward guidance, like Under Armour (UA) or Expedia (EXPE).
4. SP500 Breadth
The SP500 breadth indicators slightly this week; however, momentum remains relatively poor, with two-thirds of the SP500 trading under their respective 200-day moving averages, with no change vs. the previous week. 77% of the stocks are still in correction territory vs. their 52-week highs.
5. SP500 Daily Chart
The SP500 technical indicators are overall bearish. The index is trading below its 20, 50, and 200-day moving averages. MACD is negative, and the RSI is at 39, but not quite yet oversold.
6. Market Sentiment
Fear & Greed Index
CNN's Fear & Greed Index tracks seven sentiment indicators and is published daily.
On Friday, the indicator closed at the “Fear” level (31), a 4-point increase vs. the previous week, and the VIX traded most of the week above 30.
AAII Investor Sentiment Survey
The American Association of Individual Investors surveys each week its members on the direction of the stock market for the next six months. The results are published weekly on Wednesdays.
The last AAII survey reported that 53% of the respondents had a bearish market outlook, slightly decreasing in the past 5 days but remaining 20-points higher than the historical average.
7. Our Chart of the Week
We saw volatility again picking up this week. After a bit more than 4 months, 2022 saw already 14 days with a daily move higher than 2% (close to close). It is already twice the amount we had in 2021 and definitively setting up 2022 among the most volatile years for the index.
8. Our Favorite Analysis of the Week
The heatmap of the SP500 clearly illustrates the volatility and emotional intensity of this week. On Wednesday, after the FED decision, the markets rallied hard, with almost all the stocks finishing in the green, and then gave it back all on Thursday.
9. The Week Ahead
Next week, key earnings releases include Disney, Coinbase, and Electronic Arts.
The main economic reports for next week are the latest inflation figures for April, with the Consumer Price Index (CPI) and Producer Price Index (PPI) on Wednesday and Thursday, respectively. While consumer inflation is expected to remain high at 8.1% year-over-year, economists expect to see a slowdown from the 8.5% in March.
10. My Weekly Stock Pick
This week, our stock pick was Merck (MRK), and the stock closed down 0.4% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 23% cumulatively (no leverage, buy and hold five days), and our options trading is up 166%.
Access our performance tracking here.
We will trade a stock in the energy sector for the week ahead. Our stock pick will be released on Sunday, and in the meantime, you can learn more about our trading approach in the article below:
Read more about our trading approach here.
And remember to subscribe to My Weekly Stock to receive our stock picks, trading plan, and buy/sell alerts directly in your mailbox.
That’s all for My Weekly Stock’s debrief for week #18 of 2022 (Apr. 29 - May 6).
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Have a lovely trading week,
My Weekly Stock
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